If real estate prices are expected to drop,all else equal,the demand for bonds ________ and the interest rate ________.
A)increases;rises
B)increases;falls
C)decreases;rises
D)decreases;falls

Question

Quizplus · Accepted Answer

When real estate prices are expected to drop, investors may shift their investments from real estate to more secure assets like bonds, increasing the demand for bonds. As the demand for bonds increases, the price of bonds goes up, leading to a decrease in interest rates, since bond prices and interest rates move inversely.

If Real Estate Prices Are Expected to Drop,all Else Equal,the